Senate Bill No. 189

Senate Bill No. 189-Committee on Legislative Affairs
and Operations

(On Behalf of the Legislative Commission)

March 5, 1997
____________

Referred to Committee on Legislative Affairs and Operations

SUMMARY--Makes changes to provisions regarding audits of state agencies that receive federal funds. (BDR 17-759)

FISCAL NOTE: Effect on Local Government: No.

Effect on the State or on Industrial Insurance: No.

EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.

AN ACT relating to state government; authorizing the legislative auditor to request payment from the department of administration for the cost of conducting a single audit when federal law requires the State of Nevada to conduct such an audit; authorizing the legislative auditor to submit a final audit report to the appropriate federal agency before presenting it to the audit subcommittee; and providing other matters properly relating thereto.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

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Section 1 NRS 218.891 is hereby amended to read as follows:
218.891 1. Each state agency which is awarded a federal grant, a condition of which is the requirement that an audit be conducted to ensure compliance with federal regulations, shall arrange with the legislative auditor for the conducting of the audit and remit to him, upon his request, a sum fixed by him which approximates the cost of the audit. That amount may later be adjusted to the actual cost of the audit. The amount of the cost of the audit which the state agency does not contribute must be paid from the audit contingency account which is hereby created in the legislative fund.
2. If a single audit is required to be conducted pursuant to 31 U.S.C. § 7502, the department of administration shall arrange with the legislative auditor for the conducting of the single audit and remit to him, upon his request, a sum fixed by him which approximates the cost of the audit applicable to the additional federal audit requirements. That cost may later be adjusted to the actual cost of the audit. The costs of the single audit may be included in the statewide cost allocation plan prepared pursuant to NRS 353.331.
3. The legislative auditor shall deposit any sum remitted pursuant to [subsection] subsections 1 and 2 with the state treasurer for credit to the audit contingency account in the legislative fund. Expenditures from the account may be made only to pay the cost of audits described in [subsection 1.] subsections 1 and 2. All vouchers for expenses must be approved by the legislative auditor and paid as other claims against the legislative fund are paid.
Sec. 2. NRS 218.893 is hereby amended to read as follows:
218.893 1. The audit subcommittee shall confer with the legislative auditor to establish standards of performance to be required of a firm chosen to perform an audit. The audit subcommittee shall conduct negotiations with each of the firms recommended for consideration by the legislative auditor and shall select the firm or firms which, in the judgment of the audit subcommittee, are best qualified to meet the standards of performance established. During the negotiations and in making its selection, the audit subcommittee shall consider:
(a) The competency of the firms being considered;
(b) The estimated cost of the services required to conduct the audit; and
(c) The scope and complexity of the services required.
2. Each contract for an audit must be signed by the legislative auditor and an authorized representative of the firm selected to perform the audit. The legislative auditor shall periodically inspect the performance of the firm performing the audit to ensure that the terms of the contract are being complied with.
3. Except as otherwise provided in NRS 218.891 and 218.892 and in this section, the officers and employees of a firm performing an audit shall keep information disclosed by an audit in strict confidence and shall not disclose the contents of an audit before it is presented to the audit subcommittee [.] or submitted to the appropriate federal agency or an entity designated by the federal agency. The officers and employees of the firm have the same rights of access to books, accounts, records, files, correspondence or other documents that the legislative auditor has.
4. At the conclusion of the audit, the firm or firms which have performed the audit shall submit a written report of the audit to the legislative auditor. The legislative auditor shall follow the procedures set forth in NRS 218.821, concerning preliminary audit reports and shall attend, or have a member of his staff attend, the discussion held pursuant to that section.
5. The legislative commission may by regulation provide for the distribution of copies of the written report submitted to the legislative auditor pursuant to subsection 4, to each member of the audit subcommittee before the report is presented to the audit subcommittee pursuant to subsection 6.
6. The legislative auditor shall present the final audit report to the audit subcommittee and thereafter distribute the report or a summary of the report to members of the legislature, other appropriate state officers and the head of the agency audited. If federal law requires the legislative auditor to submit the final audit report to a federal agency or an entity designated by the federal agency, the legislative auditor may submit the report to the federal agency or entity before he presents it to the audit subcommittee.
Sec. 3. This act becomes effective on July 1, 1997.